Bank's BCCI legal bill hits £55m

THE Bank of England is increasing its legal budget to a staggering £21.2m this year to fight off the £1bn claim for compensation from the creditors and depositors of bust bank BCCI.

Over this year and the preceding two, the Bank's spending on defending the BCCI claims will have lined the pockets of its solicitors, Freshfields, by up to £55m.

The Bank will also have swelled the coffers of Nicholas Stadlen, its leading counsel in the case, and his Fountain Court chambers, who also represented British Airways in its infamous 'dirty tricks' litigation with Virgin Atlantic.

Latest figures from the Bank of England reveal that spending on the BCCI case, which opened at the High Court in January, soared last year by more than 50% to £21m.

The Bank claims it has no legal duty of care to depositors and creditors in the fraud-ridden bank, which it closed down more than 10 years ago, despite it being BCCI's regulator in London. The figures add up to around 10% of the Bank's annual budget.

In the Bank's annual report and accounts, published today, Governor Mervyn King says: 'The financial burden on the Bank is considerable. It is impossible to contemplate settlement in an action in which 22 present and former members of this country's central bank are accused of dishonesty.

'I am therefore determined that the claim will be vigorously defended.'